United States District Court, S.D. New York
DAVID F. ADAM, et al., Plaintiffs,
GCT NEW YORK LP, JAMES TIGHE, Defendants.
S. Broderick, United States District Judge.
me is Defendants' motion to vacate the Clerk's entry
of default. (Doc. 25.) For the reasons that follow,
Defendants' motion is GRANTED.
filed the complaint in this case on June 20,
2019. (Doc. 3.) On September 12, 2019,
Defendants were served with a summons and the
complaint. (Doc. 10, at 3.) On September 13, 2019, I
granted the parties' joint request for an extension to
Defendants' time to answer or otherwise appear in this
case. (Doc. 12.) I granted a second request for extension on
November 12, 2019. (Doc. 15.) Although Defendants were
required to answer or otherwise appear in this case no later
than December 2, 2019, Defendants failed to answer or
otherwise appear in this case by that date. Accordingly, on
December 11, 2019, the Clerk's office entered
certificates of default against Defendants GCT New York LP
and James Tighe. (Docs. 19, 20.) The next day, I issued an
order directing Plaintiffs to my individual rule regarding
default judgments. (Doc. 21.) On December 13, 2019,
Plaintiffs filed a proposed order to show cause, (Doc. 22),
and on the same day Defendants filed the instant motion with
a supporting declaration and an exhibit, which contained a
draft answer to Plaintiffs' complaint, (Doc. 25). On
December 27, 2019, Plaintiffs filed a memorandum of law in
opposition to Defendants' motion, and a supporting
declaration. (Docs. 27, 28.) On December 31, 2019, Defendants
filed a reply memorandum of law. (Doc. 29.)
default judgment has yet to be entered, Rule 55(c) of the
Federal Rules of Civil Procedure governs vacatur of a
defendant's default. See New York v. Green, 420
F.3d 99, 104 (2d Cir. 2005) (Under Rule 55(c), “[a]
court may set aside any default that has entered for good
cause shown . . . .”); Peterson v. Syracuse Police
Dep't, 467 Fed.Appx. 31, 33 (2d Cir. 2012) (summary
order) (“Rule 55(c) permits a party to be relieved of
default ‘for good cause,' whereas a default
judgment may only be set aside in accordance with Rule
60(b).”) “A motion under Rule 55(c) to set aside
an entry of default is addressed to the sound discretion of
the district judge.” State Farm Mut. Auto. Ins. Co.
v. Cohan, 409 Fed.Appx. 453, 455 (2d Cir. 2011) (summary
order) (citing Marziliano v. Heckler, 728 F.2d 151,
156 (2d Cir. 1984)). Under Rule 55(c), a court may set aside
an entry of default if it finds that good cause exists,
Fed.R.Civ.P. 55(c), based on a review of the following
factors: “(1) whether the default was willful; (2)
whether setting aside the default would prejudice the
adversary; and (3) whether a meritorious defense is
presented, ” Enron Oil Corp. v. Diakuhara, 10
F.3d 90, 96 (2d Cir. 1993); accord Peterson, 467 F.
App'x. at 33. The Second Circuit generally disfavors
defaults and maintains a strong preference for resolving
disputes on the merits. See Pecarsky v. Galaxiworld.com
Ltd., 249 F.3d 167, 172 (2d Cir. 2001). “[W]hen
doubt exists as to whether a default should be granted or
vacated, the doubt should be resolved in favor of the
defaulting party.” Enron Oil Corp., 10 F.3d at
I find that Defendants' failure to timely answer
Plaintiffs' complaint was not willful.
“‘Willfulness,' in the context of a default,
refers to conduct that is more than merely negligent
or careless.” Walden v. Lorcom Techs., Inc.,
No. 05-CV-3600 (ARR)(RER), 2007 WL 608151 at *3 (E.D.N.Y.
Feb. 23, 2007) (emphasis in original) (citing Am.
Alliance Ins. Co. v. Eagle Ins. Co., 92 F.3d 57, 61 (2d
Cir. 1996)). Willfulness may be found when, for example, a
defaulting party acts deliberately, egregiously, or in bad
faith. See Argus Research Grp., Inc. v. Argus Sec.,
Inc., 204 F.Supp.2d 529, 531-532 (E.D.N.Y. 2002);
see also In re Methyl Tertiary Butyl Ether (MTBE)
Products Liab. Litig., Nos. 00-Civ-1898(SAS), 07 Civ.
9453(SAS), 2010 WL 3790828, at *2 n.29 (S.D.N.Y. Sept. 27,
2010). Here, Defendants' failure to timely file an answer
was caused by defense counsel's clerical error, in which
counsel erroneously recorded his deadline to file the answer
as ten days after the deadline entered by the Court.
(Karpousis Decl. ¶¶ 19-20.) Counsel immediately realized
his mistake upon Plaintiffs' filing of the proposed
certificates of default, however, and subsequently contacted
Plaintiffs' counsel to attempt to rectify the default.
(Id. ¶¶ 21-22.) Plaintiffs do not
seriously dispute the reason for Defendants' delay.
the delay caused by Defendants has not prejudiced the
Plaintiffs' case. Delay alone does not establish the
prejudice required to defeat a motion to vacate a default.
Johnson v. New York Univ., 324 F.R.D. 65, 71
(S.D.N.Y. 2018) (citing Enron Oil Corp., 10 F.3d at
98). “Rather, it must be shown that delay will result
in the loss of evidence, create increased difficulties of
discovery, or provide greater opportunity for fraud and
collusion.” Id. (quoting Davis v.
Musler, 713 F.2d 907, 916 (2d Cir. 1983)). Defendants
filed a draft answer to Plaintiffs complaint as an exhibit to
the instant motion. (Doc. 25-1, Ex. A.) This eleven-day delay
has not caused Plaintiffs cognizable prejudice, a fact that
Plaintiffs do not dispute. Cf. Sea Hope Navigation Inc.
v. Novel Commodities SA, 978 F.Supp.2d 333, 339
(S.D.N.Y. 2013) (opining that “it would be almost
impossible to establish  prejudice . . . [where]
[Defendant] filed an appearance with the Court less than one
month after [Plaintiff] filed its motion for a default
judgment.”). The fact that Plaintiffs twice consented
to extensions in this case buttresses my conclusion that no
prejudice was caused by Defendants' delay.
Defendants have identified a meritorious defense. A movant
need not show that its defense is “likel[y] . . . [to]
carry the day, ” Johnson, 324 F.R.D. at 71-72
(quoting Enron Oil Corp., 10 F.3d at 98), but rather
must “present evidence of facts that, if proven at
trial, would constitute a complete defense.” State
St. Bank & Trust Co. v. Inversiones Errazuriz
Limitada, 374 F.3d 158, 167 (2d Cir. 2004) (citation
omitted). “A defense is meritorious if it is good law
so as to give the fact finder some determination to
make.” Am. Alliance Ins. Co., 92 F.3d at 61
(2d Cir. 1996) (citation omitted). A defense must be
“articulate[d] . . . with a degree of specificity which
directly relates that defense to the allegations set forth in
the plaintiff's pleadings and raises a serious question
as to the validity of those allegations.” FedEx
TechConnect, Inc. v. OTI, Inc., No. 12 Civ. 1674(RJS),
2013 WL 5405699, at *8 (S.D.N.Y. Sept. 23, 2013) (internal
quotation marks omitted). Here, Defendants meet this
“low threshold, ” Johnson, 324 F.R.D. at
72, because they have presented evidence of facts that, if
true, could foreclose Plaintiffs' claims pursuant to the
Supreme Court's holdings in Great-West Life &
Annuity Ins. Co. v. Knudson, 534 U.S. 204 (2002), and
Montanile v. Bd. of Trs. of Nat'l Elevator Indus.
Health Benefit Plan, 136 S.Ct. 651 (2016). Plaintiffs
have not even attempted to distinguish the instant case from
the precedent cited by Defendants.
the three good cause factors weigh in Defendants' favor,
I find that Defendants have demonstrated good cause under
Rule 55(c), and accordingly set aside the Clerk's entry
foregoing reasons, Defendants' motion to vacate entry of
default, (Doc. 25), is GRANTED. Defendants are directed to
answer, move, or otherwise respond to the complaint within
five (5) days of this order.
Clerk of Court is respectfully directed to terminate the